So what’s up this week in the Real Money Portfolio? Quite a bit of news for our companies this week, so I’ll spare you any ranting about politics or current events for the moment (you’re welcome!)
First, the ugly news.
GAN (GAN) reported pretty much what they said they would report, strong growth fueled by their newly acquired B2C Coolbet business, which had a big surge with soccer tournaments in Europe and Latin America, though with weaker growth from the B2B core business (providing iGaming and player account systems for US casinos). This is a fairly slow seasonal quarter for that B2B business (since much of it has been driven by sports bettors over the past few years, as they dabble in online slot machines while they bet, and sports betting in the US is still concentrated in the September-March period, thanks to the NFL and college basketball).
They completed integrating Churchill Downs into the B2B business, so the Twin Spires online betting platform should be their largest customer going forward, and we’re in a little bit of a slow period as we head into the key NFL season, but I’d characterize this as solid but not fantastic results for the core business and a nice surprise boost from Coolbet (well, it was a surprise when they first told us in July, not as surprising now).
Analysts have now finally caught up with the pre-released forecast from last month, so are now expecting revenues to be in the middle of GAN’s forecast range for the year at about $130 million, with positive EBITDA but with likely another year before they begin reporting consistent earnings growth again. We’ll see, the NFL season tends to send all the estimates for gambling-related companies jumping around, and no one is yet entirely sure how much in-person casino gambling will end up hurting the iGaming business, or whether COVID spikes will bring more shutdowns of casino floors, but there’s really no big surprise here after they pre-announced their new 2021 forecast a few weeks back (covered here). Investors were initially displeased, sending the shares down about 10% after hours, and then that snowballed into bigger losses when the trading day opened.
So… what was good and bad in the report? Bad was that they didn’t decide to invest in the competitive sprint to get part of the New York ...